Copper Ready to Rise

LME copper prices are rising as investors look positively on activity in China and a soft dollar. The red metal is currently trading at its highest price in two weeks.
The weaker dollar is making commodities cheaper for international buyers. This, combined with the latest polls out of Britain suggesting that the referendum vote will mean the country remains in the European Union, has given support to copper. The move in price has forced the shorts to close their positions which are now at the lowest level in almost 2 months.
China’s shadow is always looming over the copper market, but this month, the country was significantly exporting. One report showed exports of 84,959 tons which is up 259 percent over the same month last year and the second highest outflow ever. It is only bettered by the 102,000 tons of copper exported in May 2012. This copper may only being going to bonded warehouses, but it is helping keep the market tight in China which is good for the copper price.
Major industry players like Freeport-McMoRan (NYSE:FCX), BHP Billiton (NYSE:BHP) and Rio Tinto (NYSE:RIO) have not yet seen an improvement in share price from this movement. That may be because the other driver of the copper price seems to be a renewed investor appetite for risk.
This is good news for exploration companies that have worked hard to find capital and keep projects moving forward. If investors are ok with risk and are searching for big gains, the junior sector could be the beneficiary.
Some copper companies are already making headway, including Novacopper (TSX:NCQ) up almost 65 percent year-to-date, Los Andes Copper (TSXV:LA) up 21 percent year-to-date, and Atico Mining( TSXV:ATY), up 58 percent year-to-date. We also recently covered some of the biggest movers in the copper sector, who are up over 100 percent this year.
As always, China’s economy and the US dollar are the two biggest factors impacting the copper price, meaning that investors still have much to consider before committing to a stock. If copper prices can continue to improve, that could be the catalyst to bring the majors back to life, and to send the junior sector into overdrive.
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